I am a senior research fellow at the Mercatus Center at George Mason University where I work with the Technology Policy Program. I cover technology, media, Internet, and free speech policy issues with a particular focus in online child safety and digital privacy policy issues.
I have spent two decades in the public policy research community. I previously served as the President of The Progress & Freedom Foundation, the Director of Telecommunications Studies at the Cato Institute, a Senior Fellow at The Heritage Foundation as a Fellow in Economic Policy, and a researcher at the Adam Smith Institute in London.
I am the author or editor of seven books on diverse topics such as media regulation and child safety issues, mass media regulation, Internet governance and jurisdiction, intellectual property, regulation of network industries, and the role of federalism within high-technology markets. I earned a B.A. in journalism and political science at Indiana University, and received a M.A. in international business management and trade theory at the University of Maryland.
I also blog regularly at the Technology Liberation Front (http://techliberation.com) and can be found on Twitter at: @AdamThierer

Bye Bye BlackBerry. How Long Will Apple Last?

Just five years ago, “BlackBerry” was virtually synonymous with “smartphones.” It was well on its way to becoming a generic trademark, like Kleenex or Band-Aid, that would seemingly forever be associated with its entire sector. “For many, the Blackberry is a must-have gadget, a wireless hand-held computer that can send e-mail and make phone calls,” noted a 2005 NPR story on the “CrackBerry,” as some BlackBerry addicts referred to the device. (Incidentally, the story compared the BlackBerry to the Palm Treo, an equally popular device at the time.)

As a New York Times headline from earlier this year noted, “The BlackBerry [is] Trying to Avoid the Hall of Fallen Giants,” joining the infamous ranks of the SonySony Walkman, the Palm Pilot, the Atari 2600 gaming console, and the Polaroid instant camera. The article noted that “Over the last year, RIM’s share price has plunged 75 percent. The company once commanded more than half of the American smartphone market. Today it has 10 percent.” Both metrics continue their downhill slide.

If RIM can’t pull a rabbit out of the hat, the BlackBerry will become the latest case study exemplifying just how fast “information empires” can rise and fall in today’s rapidly evolving information technology marketplace. I’ve devoted numerousinstallments of this column to documenting how Joseph Schumpeter’s “perennial gales of creative destruction” are blowing harder than ever in today’s tech economy and laying waste to those who don’t innovate fast enough.

Nowhere is that more true than in the mobile phone handset and operating system marketplace, which has undergone continuous change over the past 15 years and is still evolving rapidly. Like the BlackBerry, Palm smartphones were also wildly popular for a brief time and brought many innovations to the marketplace, but the company underwent many ownership and management changes and rapidly faded from the scene. After buying Palm in 2010, HP announced it would use its webOS platform in a variety of new products. That effort failed, however, and HP instead announced it would transition webOS to an open source software development mode.

Microsoft also had a huge lead in licensing its Windows Mobile OS to high-end smartphone handset makers until AppleApple and Android disrupted its business. It’s hard to believe now, but just a few years ago the idea of Apple or GoogleGoogle being serious contenders in the smartphone business was greeted with derision, even scorn. Consider some of the pessimistic predictions that preceded Apple’s entry into the smartphone business:

In December 2006, Palm CEO Ed Colligan summarily dismissed the idea that a traditional personal computing company could compete in the smartphone business. “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.”

In January 2007, Microsoft CEO Steve Ballmer laughed off the prospect of an expensive smartphone without a keyboard having a chance in the marketplace as follows: “Five hundred dollars? Fully subsidized? With a plan? I said that’s the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good e-mail machine.”

In March 2007, computing industry pundit John C. Dvorak argued that “Apple should pull the plug on the iPhone” since “There is no likelihood that Apple can be successful in a business this competitive.” Dvorak believed the mobile handset business was already locked up by the era’s major players. “This is not an emerging business. In fact it’s gone so far that it’s in the process of consolidation with probably two players dominating everything, Nokia Corp. and Motorola Inc.”

This serves as a classic example of those with a static snapshot mentality disregarding the potential for new entry and technological disruption. Today, less than five years after these predictions were made, Nokia’s profits and market share have plummeted and a struggling Motorola was purchased by Google last summer. Meanwhile, Palm appears dead and Microsoft is struggling to win back all the market share it has lost to Apple and Google in this arena.

“The violence with which new platforms have displaced incumbent mobile vendor fortunes continues to surprise,” says wireless industry analyst Horace Dediu. He notes that Nokia’s Symbian platform went from 47% share to 16% in three years, Microsoft’s phone platforms went from 12% to 1%, RIM’s went from 17% to 12%, and other platforms went from 21% to zero. Meanwhile, over a two year period, Google’s Android OS went from zero to 48% and Apple’s iOS went from 2% to 19%.

In a marketplace this dynamic it’s worth asking: How long will it be before Apple and Google’s Android meet a similar fate? That question sounds ludicrous now considering their respective fortunes and current co-Kings of the Hill status. But posing the same question about BlackBerry just a few years ago would have also evoked howls of laughter.

No one is laughing now, however, especially not RIM execs or their shareholders.

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Blind assumption. They never thought they were the best or got lazy. They have been very aggressive and spent a fortune on R&D trying to stay ahead of the pack. They are failing because they can’t stop the integration giants Apple and Google from offering better sync beyond the smartphone platform.

The prez uses a Sectera Edge by General Dynamics. Not a Blackberry (although they look alike). No BB model can provide the level of security and encryption features required by the POTUS. http://www.gdc4s.com/content/detail.cfm?item=32640fd9-0213-4330-a742-55106fbaff32

Actually, POTUS does not use the Sectera Edge except for classified data. There was a whole thing about President Obama and his Blackberry when he first came into office. It has enhanced encryption, but is otherwise used for unclassified, personal use.

I don’t know of any businesses that are planning to migrate from iPhone or Android to Blackberry but know a ton of them, including hundreds of federal, state, and local government agencies planning to dump Blackberry for Android or iPhone. In three years, unless there is a dramatic turnaound, Blackberry will barely exist, if it exists at all.

@Wayne – Microsoft & Apple are ahead in their own league…and we shouldnt be comparing Blackberry OS(Sadistic OS!) with iOS or Windows Mobile….i guess before commenting out here on the two major corporations and on their reolutionary OS’s you should try using their products precisely and then come up with your words….for Crackberry….they were never in the league and will never be elsewhere….crap OS with crap BBM(looting people with extra charges for the service)…crap people opting for BB just for showing off!….yucks!…good its dying now….RIP..RIM!

Really great article. It can be hard to maintain historical perspective, especially in industries that seem mature. The interesting thing about both Google and Apple is that they are both consistently rated very highly in brand appreciation. I wonder if new players would also need that sort of awareness to enter and succeed in the market. Say a Facebook maybe?

Apple’s biggest risk is its reliance on the US and developed markets. Apple’s presence in emerging markets, where the largest push of smartphone growth will come from, is minimal at best.

Android, on the other hand, at least for now, has an advantage, purely because it appeals to a larger market with its price points. The biggest threat to Google’s Android, is forked versions of Android, like Amazon’s Kindle Fire, that cut Google out of the revenue from the platform.

The other point to consider is that Apple’s current profits exceed Androids total revenues and Apple could drop their prices at will. But the Android forked versions is a much bigger problem to overcome. As Microsoft and the UNIX movement learned an open platform is a wild beast that once let out of it’s cage is a difficult creature to tame, and mostly likely self destruct given time.

Indeed, but the developed markets will always dominate, the third world nations can try to emulate the developed nations’ success, but they are just posing. Apple will never be overtaken in North America, or Western Europe.

I don’t think in lowering one’s standards to please anybody especially when you don’t care about what people say…that’s apple’s case. They don’t need to lower their prices. Emerging markets are creating tones of people with discretionary income weekly who could afford apple products as it is. They just need to focus on those people and forget everybody else. My fear with Apple is Vision…if they don’t find kids with fast brain and the “I don’t care about what consumer want” attitude, they’ll be gone 10 years from ow too…

I wonder if RIM can pull and Apple and recover to become an awesome company again.

Do you ever wonder how BlackBerry first started? I met the man who created the pivotal partnership between BlackBerry and Intel, and wrote his amazing story here: http://blog.blainelight.com/2012/03/failure-frustration-and-birth-of.html

Apple will be here for a long time, because they employ intelligent, intuitive design. I knew from the second I saw the first Apple iPhone, it would succeed, just like I knew the IBM chiclet keyboard would fail. I could save Blackberry by designing a phone that would rival the iPhone. It would have a unibody like the MacBook Pro, it would do pratical, useful things that no smart phone does now. There are a lot of ways the iPhone could be a lot better.

My email address is advanpropcons@aol.com. I am not psychic but my predictions almost always come true. This is all the more remarkable since hardly anyone else thinks I’m right when I make my predictions. I predicted the 2007 market top to the day, the fall of the Berlin Wall a few years before it occured (everyone then said I was crazy). I don’t blame others for doubting my claims. I find it hard to believe them myself.

A lot of ways? Don’t hold back, let us know! I don’t think you can think of anything, but it does make sense. Surely it’s possible to improve on most anything, right? The more relevant question is, how the heck is any other phone going to gain the critical mass to pass it? Android isn’t even close to catching up, even if they are doing twofers enough to make it look competitive. No one is actually USING Android much, going by the usage statistics I’ve seen, especially relative to it’s somewhat impressive (when the mess of all of them are considered collectively)

I am waiting for Iphone 6, which maybe will be able to compete with my old Galaxy S. Last time I used an apple phone was Iphone 4, now I’m in android as it’s the best now.

Soon people will learn about the advanced technology and it’s uses and iphone will be out of the market. Apple is behaving in the same stupid way, which Nokia and blackberry had done. Their sales revenue and net income is making them over confidence, and they just forget what they achieved in last five years can be taken in a year. Samsung became the market leader in smartphone in a year, will Apple not learn it yet? Too much of cash reserve also suggested, they failed to invest money in R&D for competitive product like LG, Samsung, Google. Unfortunately first capacitative touch screen was invented by LG, first 3d phone is also by LG. Poor Apple you are failing in every way.

The fallibility in the statement is found when looking at Apple’s history: Apple were hot shots in the late 80′s and early 90′s, then Steve Jobs (R.I.P.) left and the company tanked. He came back and revolutionized the tech world. Now that he has passed on, the test will be if what he started with the iPod, iPhone, and iPad has enough momentum to continue for long, as his presence was the heart and soul of the company. Apple has clear next steps on the iPhone 5/5s, and likely the iPad 4, but the real test after that will be to see if Apple can continue to innovate in the way Steve Jobs did to put Apple in its current position, or will they start following the hardware trends that are popular? If the latter, they will very quickly become another Palm (in the smartphone world, that is… they have the MP3 player market locked down, and they have a carved niche in the PC world).

Although, saying Apple in some way failed for not having gimmicky features like 3D (yes, its just a gimmick) is not exactly true, they do need to try a bit more of a innovative approach… While the iPod was an innovation, the iPhone was just good timing to revolutionize the market. Since then, everyone is now used to Apple claiming to innovate new technology that already exists elsewhere. If the iPhone 5 has some kind of face unlock with it’s FFC, I guarantee they will portray themselves as being the first to do such a thing. Maybe its time for them to ACTUALLY innovate something? Apple iPhone 7, the first modern smartphone with an interactive holographic display!

To modify a line from Hawthorne: Corporations are always rising and falling in America. The current problem with Apple is that they have a protectionist software team that is simultaneously simplistic, paranoid, and greedy. Combine this with amazing hardware designs that have left the competition in the dust, and you have a blueprint for a jealous computer conglomerate that has stifled third-party software development and resembles Microsoft waiting for a fat anti-trust lawsuit. As soon as another company gets a grip on decent product design and embraces the jailbreak and open source communities, Apple will have no choice but to choose between transparency and mediocrity.

How have Apple stifled 3rd party development? Are you referring to the iOS or MacOS? I think that’s true for MacOS but there is so much 3rd party development for iOS as compared to BB or Microsoft Mobile. Fat anti-trust lawsuits never brought Microsoft down and they won because they did embrace 3rd party developers. Its just that the whole ecosystem isn’t designed for everyone, mostly tech heads! It is difficult to have great design and embrace open source at the same time.

Hater language there. How in the world has Apple done ANYTHING AT ALL to ‘stifle development’???

Because they don’t allow pornography for sale on the store? You Android fanboys are really hung up on that.

Apple has a REAL development environment that is state-of-the-art, and free for ANYONE who wants to develop. They aren’t just using generic Java (unlicensed even)!

And, Apple doesn’t lie and try to get along with inferior tech that has NO BUSINESS being on a smart phone. I am talking about Java. Steve Jobs was 100% right about this. Lame Adobe waits until after he is dead to admit he was right. Even THEY have abandoned it now, but the haters are still angry. That’s not going to change because we are not going back to the old days of windows and nothing else. Get over it, Windows Mobile and Blackberry are dead and Windows is next.

There is incredible momentum behind Apple, as you point out, but nothing that technology disruption can’t change. If you factor in the very human problem that we’re never more at risk than when we feel successful, Apple needs to stay humble and keep coming back to what has worked.

I’m so sick of Forbes Steve jobs nut swinging but I’m not too sure about this falling under its own weight thing. No handset maker saw the iPhone coming and the ‘droid at this point, anyway, is still nothing but a copy playing catch up. I don’t care about Apple products because they are really nothing but expensive toys that those who buy them can’t really justify aside from some jibber jabber. Still, one can’t deny the success.

Apple is an irrelevant computer maker if you ask me. But when it comes to cellular phones and personal entertainment they are a powerhouse. Time will tell how Apple fares post Jobs and you may be right about falling but Apple isn’t so bloated to the point where they will burn through cash faster than they can bring it in. As long as there is a line of dummies willing to wait in line for days for the new i(insert name) product they will do okay.

@jFogel, You whine too much. Reality check: This article is not about Apple failing. It’s not about Android failing. It’s about Blackberry failing. You are talking about things which have not happened (except in your mind, apparently).

The only way RIM can pull itself from the brink of destruction if they re-innovate their products, or if they partner up with another company. RIM seem content on how it was running the smartphone market without thinking it would ever have any competition. That way of thinking quickly kills a company. Innovation is an important factor which many companies must understand and utilize before it becomes a fallen giant. If Microsoft does purchase RIM, I believe it might set Microsoft back a few steps until they figure out how to properly use RIM and its “assets”.

The premise of this artlicle is fine but the application to RIM is an over simplification. The Blackberry brand is still the market leader in several key markets and unlikely to be replaced in some in the near term. In looking at this question it is important to distinquish between a trend and a fad and within some market segments the move to the iPhone and particularly the Android devices is currently a fad. The iPhone in particular has become the must the have device for Cool. And the Android phones have been the economy substitutes for them. However they are not the value leaders and in business and the third world consumer market, value is still important and Blackberry has maintain a strong presence in those markets. Data costs and replacement costs drive that value. BB still does the best job of providing bang for the buck when considering how much voice, text or interet content one can use on a limited budget. There compression and timely delivery of messages is still king. Fully one out of every 4 or 5 iOS or Android devices is replaced in the first year of service due to acidental breakage or theft. No warranty coverage here. That compares to only one in 8 or 9 for BB devices.

Just to amplify my last comment. Today I walked past a broken down wreck of a car that some gal had just managed to start after much trouble. As I walked by she was busy pluging her iPhone. One of two scenerios here. Either she got the phone for cheap because it was hot, or someone gifted it to her, or the other is that her priorities are severely out of wack. I’m not saying it would have be more practical for her to have had a BB, just that have a smartphone and in particular having the coolest smartphone is now the fad a overrides good judgement and common sense in those markets (eg. NA twenties singles). That’s not t say that the App revolution and BB’s trailing position are not an evolving trend that could leave RIM in the dust, but this evolution has not matured enough to stamp that epitaph on them. The eventual utility of the devices for current communication (talk, text and internet/email) will be tested once the mobile implication of cloud computing is factored in. Once that dust settles on that issue, than we might be able to declare the winners and casualites. RIM still has high level technology and expertise at it’s disposal, a clear understanding of that evolutionary path and enough financial resources and current customer base to compete, if they get it together.

I was a hard-core blackberry fan…. just traded it in for an Iphone… don’t miss the blackberry or that small screen at all…. The iphone is actually a tool from being able to use all the apps… blackberry was just a device that held emails.

I am not agree with the Mr.Adam Thierer theory/Analyse on RIM as an organisations they are working on very innovative solutions with respect to smart phone application world like MDM (Mobile Device Management) and all. though it is true that marketing strategy and profitability has came down like anything for the company due to these changes in marketing . For Example to cater India mkt they are making low profit on there product and solution just to get Volume of customer… and you can see they are almost there in this part of the world with respect to customer base…i will end my comment just by saying that ” its too early to say BYE BYE Black Berry “ .

An excellent summary of market trends. But what it really demonstrates is the tendency of people quickly getting fat within the status quo establishing structures and developing enourmous greed without merit. When the original founder spirit remains vivid and the company flexible, it works. Apple in its current state is experienced by smaller businesses and software developers as an rather arrogant fortress, not caring for what I may call the grassroots, showing of endlessly their success, that is a result of a few clever and agile individuals. I would really appreciate if the big corporations would think more about who actually is their primary asset. As someone organizing a major European Software Conference event with my ears virtually on the ground they might learn more about the next stampede on the market.

I may not be as foresighted as any of other Top exec.. but i surely belive there still are survival oppurtunities for RIM – they have been a big sucess in some of new markets.. They need refocus. move there operations out of places were it is mature smartphone market and too many suitors for same customer base..

The problem is, when Blackberry came out, it was a big hit, but after that, their next models had no revolutionary feature.. I’m not surprised at all that Blackberry is gone. As for Apple, I doubt the Iphone will be gone, I think Android and Apple will stay here.

Once again a company develops a good technology and then sits on its laurels. There is nothing new here it is the history of the technology industry. IBM was heavily impacted by DEC and the mini-computer, DEC was then hit by Sun and Sun was hit when the PC came along.

Companies fail to achieve continuous product innovation. I think a lot of this happens because most companies are now run and controlled by salesmen who have limited understanding of the products they sell and what it takes to keep them moving forward.

Apple went through similar issues but it is notable that their re-incarnation was inspired by a man who believed in product innovation. Microsoft was the same for many years. Microsoft has stagnated. Only time will tell whether Apple stagnate.

The problem RIM has is their problems started many years ago and even when the 1st iPhone came along they didn’t react. I was impressed by their ability to appeal to a younger, non-corporate customer base, I didn’t expect 14 year olds to want Blackberry phones but they did. However, this is a different price point in the market and moved the Blackberry from a high-end professional device to a cheaper mass market device. They did not seem to allow for this change well.

I suspect the retrenchment we have seen from RIM is just the last dying spasms from the company. But I doubt they could afford, or more importantly, have the talent to innovate given they have been so stagnant for so long.

Actually your comments echo my thoughts on this subject. I always was amazed the way that DEC did not respond to the PC threat by reducing the price of the PDP-11 range (single chip LSI 11/73) and then preserve the VAX line for their traditional business. i.r. migrate PDP-11 customers to VAX and then position the PDP 11 single board (Falcon) as the PC… they had everything they needed software wise…compilers, operating systems, applications (WP, Calc, Dbases…).

It would have been some stupid sales manager protecting his product line and numbers for the next quarter rather than doing the right strategic thing for the business. This is not to decry salesmanship (its essential!) but … sometimes you have to look further to repel the new emerging competition from further way.

RIM… Should have stuck firmly and squarely to the corporate market. In order to gain something … you have to give up something …

Remember Sony with the Trinitron CRT TV… best .. number 1 … picture quality at the time better than flat panel LCD… but … ever since Captain Kirk hit the screens .. the public have been eagerly awaiting a flat screen TV… now they can actually buy one… oh the picture is not quite as good… but hey it’s cool and I can actually move the thing when I want to dust behind the TV set…So Samsung et al just took the whole market.

The leader in one generation of technology hardly ever makes it to be the leader in the emerging generation…why? … well usually because you have to fund new generation technology/products (which you may not know for certain what they should be yet) out of current earnings AS well as protecting current earnings (marketing, PR, maintenance … etc) versus .. a big fat VC backing or a decision to milk to the maximum extent an existing cash cow knowing that your future lies in a new direction (which could then be used to revitalise the cash cow with much bigger money then it could self generate).

RIM’s only option is to focus on the corporate market….is it too late? is it un-trendy for business users to be seen with a Blackberry versus a cool trendy iPhone? it used to be trendy to have a Blackberry 5 years ago.. but today? Need a real benefit for businesses to value deployment of the Blackberry … it probably needs to be a combination of reduced OPEX costs in addition to tangible business operating advantages ( security of info, access to mission critical data, robustness of design for intended operational environments (e.g. industrial, field, medical)… In short they need to focus on owning some specific corporate market sectors (rather than a generic corporate sector … too late to do this now as they competition are in the generic corporate sector) by offering the right device together with the right apps and services to make the offering ultra compelling and then make sure they defend the territory like their life depends upon it (which it will!!!).

Trying to sex up a Blackberry to compete head to head with Apple was not/is not viable (Blackberry were/still are in the phone business and the perception of a blackberry in the users minds is a phone with a screen and qwerty keyboard). No amount of marketing is going to change that perception.

Why could Apple pull it off?…simple THEY WERE NOT IN THE PHONE BUSINESS and the perception of APPLE was carefully managed by Steve to be a cool technology company rather than a PC or MP3 company… So APPLE need to at all costs avoid positioning themselves as a mobile phone company.. hence the iPad … more of APPLE we are a cool technology company…. Ultimately iPhones will be a 5-10% market share product used by uber cool customers (just like the MAC). Yes I know they did much better with iPod … but one could argue that an iPod is a stepping stone product towards the smart phone so no real serious competition emerged. Apple used the iPod base as the customer base to transition to the iPhone.. effectively an iPod/iTunes (tick), plus a phone (tick) plus something else new and exciting .. touch screen (high tech teck), Apps (tick) …

RIM were faced with trying to retrofit an existing product (screen/qwerty) with Ipod/itunes.. plus make it look cool and trendy for the teenage market… Bit of a hard act to pull off .. plus PERCEPTIONS (screen/qwerty)

A volvo should always be a safe car to drive

A FedEx should always be an overnight delivery system

It’s all fairly easy to understand really .. nothing really changes .. its good old marketing and product/company perceptions…

It is really remarkable how so many highly paid people make the same stupid mistakes… success -> arrogance -> failure

Too many corporate greasy pole merchants in top positions who have never started a business or developed a product with a passion. People whose entire careers have just been glued to reading market research reports and regional/national sales spreadsheets…